NYSE Seeks SEC Approval for Five Leveraged and Inverse Bitcoin ETFs

Plenty of cryptocurrency enthusiasts still have high hopes of seeing Bitcoin ETFs gain regulatory approval. If it is up to the SEC, such investment vehicles will not be approved in the near future. At the same time, the New York Stock Exchange is putting a lot of pressure on the regulator to approve so-called leveraged and inverse Bitcoin ETFs. A total of five derivative projects are of great interest to the NYSE right now.

Reverse Bitcoin ETFs are a Thing

It is evident there is no shortage of Bitcoin price speculation and hype right now. Whether or not this means we will see the Bitcoin price go up or down in the future remains to be determined. If Bitcoin exchange-traded funds ever gain regulatory approval from the SEC, things will head in a rather interesting direction. For now, it remains highly unlikely any Bitcoin ETF will ever gain SEC approval unless proper regulation is introduced first.

The New York Stock Exchange is not giving up without a fight, though. In fact, it is hopeful that the SEC will approve five ETFs related to the world’s leading cryptocurrency. These are not the traditional investment vehicles, mind you, but rather leveraged and inverse versions. All of these ETFs are linked to Bitcoin futures, which are now considered “legal” in the US financial system. A Bitcoin futures ETF has a much higher chance of being approved than a classic Bitcoin ETF.

Among the first Bitcoin ETFs to be proposed are the Direxion Daily Bitcoin Bull and Bear Shares. With a maximum leverage of just 2x, there is no real financial risk associated with these filings. However, they could still culminate in major financial losses for traders who bet on the Bitcoin price at the wrong time. Moreover, if such vehicles were to be approved, it would set a rather worrisome precedent for the future of Bitcoin-related ETFs in general.

It is also worth noting that none of these vehicles will track the spot price of Bitcoin dollar for dollar. Rather, the fund will invest in Bitcoin futures contracts rather than Bitcoin itself. It is important to distinguish between the actual Bitcoin price and the futures price, as they will be very different at any given time. A 1% gain in the Bitcoin price is equivalent to gains of between 1.25% and 2% for the Bull Shares. It is a very complicated matter for people who aren’t used to leveraged trading, but the concept also has a certain appeal.

It goes without saying that these Bull and Bear Shares are not intended to be long-term investments whatsoever. They are by far the most speculative Bitcoin-related investment vehicle to date, although it remains doubtful the SEC will approve them. Leveraged Bitcoin ETFs may gain regulatory approval at some point, but it’s evident there are a lot of people who would love nothing more than to gamble on the Bitcoin futures price for a short time span.

Should these ETFs get approved, they will commence trading on the Arcade marketplace. This is a secondary marketplace associated with the New York Stock Exchange. Although not everyone may like the concept of these leveraged ETFs, these further confirm that Bitcoin will not go away anytime soon. Wall Street has shown an increasing appetite for this new form of money, even though speculation remains one of the top priorities for the time being.

About The Author

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.